Bernie Sanders the contender for the US Democratic Presidential Race ...
.... has claimed the country's three richest billionaires own more than the poorest half of the US Americans.
Now he is a frequent critic of wealth inequality in America, whilst being attacked for being modestly well off himself at $2.5 million which he earned (public earnings, pension pot, house value and book sales). But these sorts of claims by him and others against him, often fail to stand up to scrutiny, and depend upon how you read the data.
Well according to a 2017 study, he has in this instance a valid case. This study named Bill Gates (Microsoft), Jeff Bezos (Amazon), Warren Buffet (CEO of Berkshire Hathaway), had a combined wealth of $248,5bn (Forbes list), whilst the Institute for Policy Studies calculated that their wealth was over $3bn more than the bottom 50 per cent (160 million citizens), of the US population combined. Furthermore figures suggest that the wealthiest top 1 per cent of the US citizens share of wealth has been growing since the early 1980's.
Now some of this continued rise in the wealth gap can be laid at the feet of US President Ronald Reagan who between 1981 and 1989 introduced trickle down wealth redistribution (basically tax cuts for the wealthy) .... known as Reagonomics, it was the fallacious theory that the wealthy spend their surplus, and this excess spending trickles down into the wider economy. This 80's decade saw the first widening of the income gap between the richest and the rest of the US, since the late 1930's.
The US national debt also tripled in those eight years, and set in motion the reversal of the post-World War II trend of a shrinking national debt as percentage of GDP, and until the late 1970's a closing of the wealth gap in the US by positive wealth redistribution measures. However, as Reagan was replaced by Democrat President Bill Clinton from 1993 to 2001, the fact that despite having the mantra "It's the economy, stupid" on his desk, he failed to act as the check and balance that two party politics demanded, and reintroduce positive wealth redistribution tax measures, means Clinton holds some blame as well.
Since then, despite the Republicans and Democrats taking turns in Presidential power, the Republicans have taken every opportunity under the Bush Presidents, and now President Trump, to attempt to decrease taxes on the wealthy. Strangely however, the Democrats under President Obama (2009 - 2017) also, like Clinton eight years before him, failed to make any serious attempt to reverse the tax cuts to the wealthy.
Just one further observation about this current situation. You might think that one example of a country where this condition also pertained for a lengthy period of time was Tsarist Russia. However in point of fact, in terms of wealth inequality, late Tsarist Russia pre-1904, seems to have been relatively egalitarian among countries where data was available for that time. This, even though 75 per cent of all Pre 1917 Russians worked in agriculture, and 79.3 per cent were classed as peasants. The second largest social group was the 17.5 per cent classed as urban and in third place, was the 1.5 per cent of the population who were aristocracy/nobility.
Only 2 percent of all households had an annual income exceeding 1,000 roubles, but in terms of wealth distribution Tsarist Russia was far more equitable than many comparative countries of that period, or the current USA. For instance the Top 5 per cent of the wealthiest Russians controlled 22.7 of wealth, whilst the bottom 40 per cent of households controlled 21.3 percent of wealth. This is far more equitable than the situation highlighted by Mr Saunders in the USA.
Just for comparisons ....
..... The current US wealth inequality has worsened since 2003, and even then, it compared badly with pre-revolutionary Russia. Oddly wealth inequality in the US is now back to about what it was when the Clayton Antitrust Act in 1914 was being enforced in the US, as part of the strengthened anti monopoly measures.
Now it has to be said that many of the US's super rich do put vast amounts of money into charitable trusts such as the Bill and Melinda Gates Foundation which holds over £40.20bn ($50bn) in assets, or Mr Buffet giving away a staggering £27.4bn ($34.5bn) to charities since 2006. However just as many, if not more of the USA's proclaimed super rich avoid taxes if they can, and often only give charitable donations that are partially 'tax deductible' i.e that make them look good, but cost them less than the headline amount, while depriving the US tax system of their due.
This, plus other tax tricks such as (legally or otherwise), avoiding reporting income from restructured debt, allows many individuals and corporations to avoid paying their fair dues in taxes e.g. Donald Trump reported racking up $1.17 billion in failed real estate losses between 1985 and 1994. He (via his businesses), then defaulted on hundreds of millions of dollars in bank loans, then failed to report as income, the monetary benefit of those restructured bank loans. Thus, he paid no federal income taxes for most of those years, which many of his critics claim he wasn't entitled to do. That particular tax provision, which allowed some corporations to avoid reporting income from restructured debt, has since been repealed. The critics argument was that Trump operated most of his businesses as partnerships rather than via corporations, and so that loophole didn't apply in those losses.
However, many of the USA's more wealthy citizens recognise that public unease over this growing wealth inequality is dangerous, and in a public letter to the 2020 Democratic (and presumably Donald Trump) Presidential Candidates, call on them to support a moderate wealth tax on the fortunes of the richest 1/10 of the richest 1% of Americans. They have suggested that addition of a tax of two cents per dollar on all assets after a $50m exemption, and one cent per dollar tax on assets above $1bn. It would generate nearly $3tn in revenue over ten years, they said.
Until someone running for Presidential office asks US voters to accept that the wealthiest top 10 per cent need to be taxed more i.e. that positive wealth redistribution tax measures are needed, and then gets voted into office, with party control of both elected houses (Senate and Congress), then the rich will get richer, and the very rich, will get even richer.
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| Bernie Sanders Wealth Inequality Claims ... Not Popular With Some Americans |
.... has claimed the country's three richest billionaires own more than the poorest half of the US Americans.
Now he is a frequent critic of wealth inequality in America, whilst being attacked for being modestly well off himself at $2.5 million which he earned (public earnings, pension pot, house value and book sales). But these sorts of claims by him and others against him, often fail to stand up to scrutiny, and depend upon how you read the data.
Well according to a 2017 study, he has in this instance a valid case. This study named Bill Gates (Microsoft), Jeff Bezos (Amazon), Warren Buffet (CEO of Berkshire Hathaway), had a combined wealth of $248,5bn (Forbes list), whilst the Institute for Policy Studies calculated that their wealth was over $3bn more than the bottom 50 per cent (160 million citizens), of the US population combined. Furthermore figures suggest that the wealthiest top 1 per cent of the US citizens share of wealth has been growing since the early 1980's.
Now some of this continued rise in the wealth gap can be laid at the feet of US President Ronald Reagan who between 1981 and 1989 introduced trickle down wealth redistribution (basically tax cuts for the wealthy) .... known as Reagonomics, it was the fallacious theory that the wealthy spend their surplus, and this excess spending trickles down into the wider economy. This 80's decade saw the first widening of the income gap between the richest and the rest of the US, since the late 1930's.
The US national debt also tripled in those eight years, and set in motion the reversal of the post-World War II trend of a shrinking national debt as percentage of GDP, and until the late 1970's a closing of the wealth gap in the US by positive wealth redistribution measures. However, as Reagan was replaced by Democrat President Bill Clinton from 1993 to 2001, the fact that despite having the mantra "It's the economy, stupid" on his desk, he failed to act as the check and balance that two party politics demanded, and reintroduce positive wealth redistribution tax measures, means Clinton holds some blame as well.
Since then, despite the Republicans and Democrats taking turns in Presidential power, the Republicans have taken every opportunity under the Bush Presidents, and now President Trump, to attempt to decrease taxes on the wealthy. Strangely however, the Democrats under President Obama (2009 - 2017) also, like Clinton eight years before him, failed to make any serious attempt to reverse the tax cuts to the wealthy.
Just one further observation about this current situation. You might think that one example of a country where this condition also pertained for a lengthy period of time was Tsarist Russia. However in point of fact, in terms of wealth inequality, late Tsarist Russia pre-1904, seems to have been relatively egalitarian among countries where data was available for that time. This, even though 75 per cent of all Pre 1917 Russians worked in agriculture, and 79.3 per cent were classed as peasants. The second largest social group was the 17.5 per cent classed as urban and in third place, was the 1.5 per cent of the population who were aristocracy/nobility.
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| Russian Wealth Distribution 1904 |
Only 2 percent of all households had an annual income exceeding 1,000 roubles, but in terms of wealth distribution Tsarist Russia was far more equitable than many comparative countries of that period, or the current USA. For instance the Top 5 per cent of the wealthiest Russians controlled 22.7 of wealth, whilst the bottom 40 per cent of households controlled 21.3 percent of wealth. This is far more equitable than the situation highlighted by Mr Saunders in the USA.
Just for comparisons ....
 |
| Comparative Wealth Distribution Different Time Periods .... |
..... The current US wealth inequality has worsened since 2003, and even then, it compared badly with pre-revolutionary Russia. Oddly wealth inequality in the US is now back to about what it was when the Clayton Antitrust Act in 1914 was being enforced in the US, as part of the strengthened anti monopoly measures.
Now it has to be said that many of the US's super rich do put vast amounts of money into charitable trusts such as the Bill and Melinda Gates Foundation which holds over £40.20bn ($50bn) in assets, or Mr Buffet giving away a staggering £27.4bn ($34.5bn) to charities since 2006. However just as many, if not more of the USA's proclaimed super rich avoid taxes if they can, and often only give charitable donations that are partially 'tax deductible' i.e that make them look good, but cost them less than the headline amount, while depriving the US tax system of their due.
This, plus other tax tricks such as (legally or otherwise), avoiding reporting income from restructured debt, allows many individuals and corporations to avoid paying their fair dues in taxes e.g. Donald Trump reported racking up $1.17 billion in failed real estate losses between 1985 and 1994. He (via his businesses), then defaulted on hundreds of millions of dollars in bank loans, then failed to report as income, the monetary benefit of those restructured bank loans. Thus, he paid no federal income taxes for most of those years, which many of his critics claim he wasn't entitled to do. That particular tax provision, which allowed some corporations to avoid reporting income from restructured debt, has since been repealed. The critics argument was that Trump operated most of his businesses as partnerships rather than via corporations, and so that loophole didn't apply in those losses.
However, many of the USA's more wealthy citizens recognise that public unease over this growing wealth inequality is dangerous, and in a public letter to the 2020 Democratic (and presumably Donald Trump) Presidential Candidates, call on them to support a moderate wealth tax on the fortunes of the richest 1/10 of the richest 1% of Americans. They have suggested that addition of a tax of two cents per dollar on all assets after a $50m exemption, and one cent per dollar tax on assets above $1bn. It would generate nearly $3tn in revenue over ten years, they said.
Until someone running for Presidential office asks US voters to accept that the wealthiest top 10 per cent need to be taxed more i.e. that positive wealth redistribution tax measures are needed, and then gets voted into office, with party control of both elected houses (Senate and Congress), then the rich will get richer, and the very rich, will get even richer.
When Democrats proposed a 70% marginal tax rate on earnings above $10M the Right refused to understand it and persistently reported that everyone would be left with only 30% of their earnings! The dishonesty of the Republicans is only matched by the gullibility of their base, or at least their eagerness to swallow the lies.
ReplyDeleteAnd the Lefts supporters are any less gullible?
DeleteJust simply 'super taxing' the rich only brings in extra income for a short period, if at all, as French President Hollande discovered all too soon. In 2012 he had implemented a “super tax” of 75 per cent for salaries above $1.3 million. He withdrew it in 2015, after drops in investment caused tax revenues to fall. Even Sweden’s Lund University reported evidence in 2010 that "taxes on wealth dampen economic growth."
U.S. Top Marginal Federal Income Tax Rates were over 50 per cent between 1932 and 1985, peaking at 93 per cent in 1943, and as recently as 1963, the top US income tax rate exceeded 90 percent. They are currently 37 per cent, but this does not factor in state and local taxes, which vary across the country and raise the top levels somewhat.
The US governments overall Tax Revenues as a Percentage of GDP in 2017 was well below the OECD countries average at 26 per cent (The OECD average is about 35 per cent). France raises the highest proportion of its income via tax revenue at 45 percent.
The OECD listed the United States as its fourth-most-unequal wealth inequality member in 2014, the latest year with data from all members, trailing only Costa Rica, Mexico, and Turkey.
.... I am not arguing against wealth redistribution per se, indeed I think we need to redress a trend towards inequality since the start of the 1990's, but the pendulum must not swing too far the other way, in a Corbyn type 'revenge tax' policy.
Killing the goose that lays the golden eggs for a one off glut, is just as stupid as not collecting enough of the golden eggs each year, and starving the government of funds.